Joseph Schumpeter and John Kenneth Galbraith: two sides of the same coin?

Abstract

Joseph Schumpeter and John Kenneth Galbraith were two of the most influential scholars of the previous century addressing the most fundamental questions confronting society—what is the nature of economy and how is it shaping society? At the heart of their work was a concern about the gap between what they perceived to be the standard models in economics and the evolution of the actual economy. In particular, this meant abandoning the standard models of neoclassical economics and instead focusing on what both perceived to be an evolution towards a more managed economy. The purpose of this paper is to explain the relationship between the works of Schumpeter and Galbraith. Perhaps one of the enduring lessons that bonded Schumpeter and Galbraith is their keen focus on how the economy was evolving over time, and with it, the institutional landscape, that carried with it huge implications for public policy.